What is happening to Exxon can be traced to a huge planning failure combined with the obstinancy of maintaining a high level of capex while maintaining the dividend. The planners should have known that a Pandemic like the one in 1918 could last as much as three years. So the first thing they should have done is to inform the Board with a recommendation to severely cutback capital investment. Secondly, it is damn stupid to embark on a massive expansion of refining capacity in Beaumont when the hand writing is on the wall that gasoline demand was going to drop as more and more the government was pushing electric vehicles. Looks like the planners failed to convince management that they weredriving the company off the cliff. I worked 7 years in Corporate Planning in the 90s ...I ought to know. Lee Raymond must be cursing to high heavens. He left a pristine balanced sheet and a combination of bad decisions or bad luck on the part of Tillerson and his subsequent successor have severely impaired the company's pristine reputation.
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LR was not the heralded CEO some of you believe. Before the merger, Exxon's Upstream portfolio of new projects was practically bare. LR bet on offshore Angola and what he proclaimed was the biggest discovery ever in the GOM (Hoover Diana). Angola turned out ok, but Exxon's ownership interest was too low. For those who never heard of of Hoover-Diana, that's because it was a flop. Exploration couldn't even find oil in a refinery. The merger completely and totally saved Exxon. Mobil brought dozens of high quality on the shelf projects which they didn't have the cash flow to develop. XOM lived off hMobil assets such as Qatar, N—ria, and GOM for several years following the merger. It was a master stroke for LR to pull of the merger, give him credit, especially for getting it so cheap. But Exxon would have been in decline mode by early 2000's had the merger not been completed. Noto did sell out hMobil employees and investors, but Mobil was badly in need of cash and saw industry consolidations coming like a freight train. RT made a terrible decision on buying XTO, and DW is destroying value by the day. Neither company has had a visionary CEO for decades, rather it is just a matter of who was the worst. hMobil employees tried to bring across a much better culture and management style, but that was squashed by the hard as.es from Exxon within a few weeks. And now we see what is left 20 years later. Utter decimation.
An anecdote from the past. When desktop PCs were being evaluated as to which brand/model to place on every employee's desk, the conclusion was that the IBM XT was the standard that would be in place for at least SEVERAL YEARS, so that would be the one to purchase. The two guys who reached this conclusion were in their mid-50s with mainframe background experience (as there were no PC-savvy people around). The IBM XT was superseded the very next year by the IBM AT.
Ha! Have you seen the type of people that get promoted to planning?! I recall one engineer that would come to work hungover (and even missed a meeting because he wrecked his car on the way to work). But he was the typical good 'ol boy. Funny that he didn't even work 2 weeks in planning ad he bounced from the company a few years back. Surprisingly he boasts about his planning "experience" at Exxon on his bio!!!
From a company standpoint, share buybacks and dividend payouts are the worst use of many a company can invest in. Regardless if it's at $5/share or $100/share. It is funneling money out of the company and into people that are holding peices of paper.
On January 1, 2008, the company had over $31 Billion (with a B) in cash in the bank.
Over the next 11+ years through June of 2020, the company subsequently spent over $243 Billion (yes, again with a B) on dividends and stock re-purchases (the latter being $112 Billion) with cash and earnings. Note, A vast majority of the stock was purchased at $66-$97 per share, "Great buy" given current prices.
This stock price maneuvering and lack of management foresight by 3 different CEOs and Board of Directors has wasted over a decade's worth of the company's earnings and cash position. Not saving a single dollar, XOM's cash position before this epidemic even started was essentially zero ($3 Billion via. new debt) and now adding even more debt in '20.
While a new strategy direction and trimming of costs for the company are long overdue, this current fire drill life altering method of change impacting real people & families could have easily been avoided through proper management & governance of the company's funds.
The emperor (XON) wears no clothes!
Coming from EMIT, we anticipate all possible kinds of catastrophe and prepare for it. I'd think that the company has a plan for all kinds of scenarios such as this. Upstream has target for 2025 and I hope that they have a plan b now that we all know that's not going to happen.
Being familiar with the Corporate Planning function in Canada, I can say that there is no scope for "scenarial planning" or alternative views to be introduced in the process. The Plan Data Guide is the bible, no deviations are permitted to the assumptions provided. If management does not like what they see, they pretty much dictate what the plan should be, its called a topside adjustment. No surprise we find ourselves in this horrible situation with a tragedy unfolding before our eyes. Sadly, there is no accountability and the same incompetent executives and unqualified managers who destroyed this company will come out ahead.
COVID-19 is a real oandemic, but not the first one we prepared for. SARS, MERS, we had our own testing, protocols, evacuation ... you name it, full-on science and safety. This one? They did not even know what it was. I happened to get exposed early on and MOH was totally clueless. No initiative- taking their clues from the governor of Texas and the president of the US. For me this was a wake-up call that being silent and politically compliant had trumped science and safety. The iceberg has already been struck, there is no going back.
Spot on!!!!
Seriously? You were a planner and it never occur to you that you plan what you are told?
Unpopular career move to bring alternate views that don’t line up with the management committee O&G energy Plan. They know everything. It was said, the culture does not allow you to go against group thought.
No one around here has the balls to ever go against group thought. If you do, you would have been fired long ago. That is what k–led this company. Yes men, every single one of them.
Nothing wrong with a new crude unit so long as it forces competitors to shutdown theirs. With BP leaving the market, the writing is on the wall.
There is nothing wrong with a new crude unit if the strategy is to shutdown the neighbors units.